Thursday, January 03, 2013

Burnout - or why framebuilders don't last long

So I've been building frames for *almost* 10 years now, and selling them for something like 8 years. Doesn't sound like much but at this point, that makes me almost an old man of the bike industry. Why? Because so many framebuilders go out of business so quickly.

I've always wondered why that is, but after those 8 years of interacting with other builders, I've arrived at the following model.

-Start with 100 new framebuilders, all beady-eyed and eager to build bikes.

-Of our builder population, let's say:20% are recent college graduates or dropouts living with their parents/roommates.30% are naturally terrible at making things out of metal when they start (I was one of these).50% don't remember trig from high school and think building good bikes is all about pretty fillets or Justin Bieber's initials carved into stainless lugs.75% have no startup funds and have to order tubesets one at a time, file miters by hand, and work out of an unheated garaged (again, me). 80% have never run a business of any kind and are unable/unwilling to use math to figure things out - like how much money to charge, or what their costs are.100% will sometimes screw stuff up, and 50% (or more) think they are perfect and won't accept blame for anything going wrong with a frame (whether it's a cracked tube, geometry not quite right, whatever) and will slowly (or quickly) accumulate angry customers.

And of course most builders are going to fit into more than one of these categories of doom - for example, I was a grad student living with my girlfriend, who sucked at making stuff and had no money. All of them can be overcome, but the more you have to overcome, the harder it will be, and so you see a lot of builders drop out after only a year or two - I've talked to folks who literally were unable to tell me what the difference between gross and net was, who were amazed that they still could only afford ramen after a year of building. Or folks who build *amazing* works of art - but take 6 weeks to build one frame. Guys who couldn't tell you how to calculate an effective seat tube angle, people who have only ever ridden one kind of bike but are building something else for customers, dudes who spend all day drawing up laser cut dropouts to distinguish themselves when they don't have any idea how to fit a rider to a bike, etc, etc.

I've been told that only something like 15% of the builders at NAHBS actually make money, and I'm inclined to believe it. Framebuilding attracts artists and dreamers, but then it eventually spits most of them out once they get a boy/girlfriend or a kid or two and realize that while the first dozen frames were fun, the next 50 aren't going to be, and that they're losing money on every one.

So the bottom line is that if you fight through your own shortcomings, are realistic about your goals, and are very lucky (I caught the "29ers are teh bestest!" wave, nice timing) you can make a decent living. I would guess the success rate is something like 5%, though.

Then, here's the thing - a lot of people succeed, but just burn out. It's cold in the shop. You cut your fingers on sharp metal. You answer phone calls that don't lead to sales. You watch your dumbass friends (I'm looking at you, Feldman) working at "real" jobs making twice as much money as you as they get promoted at Initech.

So the folks you see who are still doing it after a decade, or multiple decades, are talented, lucky, and also somewhat crazy (except me, I'm just lucky and crazy).

9 comments:

I feel compelled to leave some sort of clever message, but apparently am too much of a dumbass to do so. Tried to look up the other references to me on your blog (since I think they're 99% disparaging) and stumbled upon this, which I thought was an amusing blast from the past:

"80% have never run a business of any kind and are unable/unwilling to use math to figure things out - like how much money to charge, or what their costs are."

I think that sums up the way most small businesses are run regardless of industry, which is sad.

From my experience buying from builders, the ones that would get my business again are the ones who have learned the numbers side of it. That skill seams to correlate with better customer service as well which I'd rank quite highly.

It's no wonder those that can't run a business, can't run a business. I consider them something closer to starving artists than struggling businesses.

I'm fortunate enough to only fall into the no startup funds category, which is still kind of a bummer when I see all these guys with no metalworking skills using Anvil fixtures. I guess I have plenty of tume to build tooling when I have 3 customers a year. I have a good day job though, amd I'll be keeping it.

You have been at this only 8 years? I thought it was longer than that. You are wise beyond your years. I was a few of those things and in between carving Bieber's initials and lasering everything I could, I somehow plowed through it and found a place. A bit of a maze though where I would go a wrong direction, get stuck, and try another course. I tell all of my students who are interested in such things to learn basic accounting and take a business course at the local CC.

Now, I went and ran the numbers back in the early nineties and decided to not hang up the shingle. I did have the slight advantage of having worked in a bike shop for three years, and thus some familiarity with the depressing small-business budget...

I also knew a couple people at Fat City, and despite having a completely successful brand, the business itself was not doing well.

There were things I wanted to be part of my future--little things like health insurance and food other than rice and beans. So I went and got a "real" job. Well, the paychecks are real, at any rate.

I think any "lifestyle hobby" will inspire people to start businesses, whether or not they should.

My big hobby these days is homebrewing. There are tons of homebrewers trying to 'go pro' right now, opening up ridiculously undersized breweries, with no startup capital and no idea how to run a business.

I've been thinking more about this topic, and the 'why don't people use math?' thread.

1) Cost accounting is really hard. Most manufacturing companies have one or several full-time cost accountants. It's probably not as hard for a single framebuilder, but like general accounting, it's not intuitive for most people.

2) If people are too dumb to use math, that's probably good for people who can. So part of me hopes no one will listen to you, so I'll have a competitive advantage.